DryShips (DRYS) exploded to the upside the other day, and if you weren't strapped in tight you were at risk of being injured by the dragster-like acceleration. Like other shipping names we have looked at today, we needed to use a "log" chart, below, to get a good sense of the move, driven by a rebound in freight rates.
In this daily chart of DRYS, above, we can see prices were in a long and deep downtrend. Prices only stabilized for a week before a 0-to-60-mph rally to $100 from single digits. Did you feel the wind rushing by? In one of the fastest moves I have ever seen, the slow stochastic indicator went from extremely oversold to overbought in just a few days. Prices are down sharply today, retracing the bulk of the advance. A shallow pullback can suggest that further gains lie ahead, but a really deep reaction can mean the rally was a flash in the pan and we could retrace the entire move.
In this longer-term weekly chart, above, we can see a very strong downtrend with the prices going back, adjusted for a reverse split. The employees of Citigroup (C) , who had to take part of their bonuses in stock, know what that is like. Despite the dramatic surge higher, the declining 40-week moving average line acted as resistance. I would let the dust settle on this security.